ENT588 University of Phoenix Balance Sheet and Cash Flow Statement Paper Create a 350-word Executive Summary that further expalins your ventureReview the r

ENT588 University of Phoenix Balance Sheet and Cash Flow Statement Paper Create a 350-word Executive Summary that further expalins your ventureReview the revenue and expense items Review the budget, income statement, and cash flow items,Develope a Balance Sheet showing Current Assets (Cash), Buildings and Equipment, Liabilities and Owners Equity. Running head: INCOME STATEMENT SUMMARY
Income Statement Summary
Jessica McNairy
University Of Phoenix
3/26/18
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INCOME STATEMENT SUMMARY
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Income Summary
The income statement is one of the three primary financial statements used to assess a
company’s performance and financial position (the two others being the balance sheet and
the cash flow statement). The income statement provides information about the revenue,
expenses, gains, and losses of the company. The expenses are the costs to the company which it
incurs during its mode of operation.
Sections of the Income Summary
The Roses, Roses, Roses Flower Shop total revenue for Jan1, 2017 thru Dec 31, 2017 was
$20,000. This revenue was obtained by the selling merchandise from the flower shop. The
primary activities of a retailer are purchasing merchandise and selling the merchandise. The
basic equation on which an income statement is based is:
Revenue (for the period) − Expenses (for the period) = Net Income or Loss (for the period)
The Roses, Roses, Roses Flower Shop is a new business and the cost of goods sold was
monitored very carefully. Only necessary products such as flowers and containers as well as any
costs directly associated with the sale, such as delivery of the flowers were included. The cost of
goods sold for the year of 2017 was $6,000.The gross profit for the flower store was:
Revenue $20,000-Cost of Goods Sold $6,000= Gross Profit $14,000
INCOME STATEMENT SUMMARY
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Operating expenses include things such as salaries, rent, and utilities which are sometimes
referred to as non-manufacturing expenses.The sum total of the operating expenses from the
flower shop equaled to $7,700.
“Pretax operating income is the primary measurement of the total earnings generated by the
firm without regard to taxes and net interest income (expense). This measurement is an
intermediate measure of firm performance that helps describe the firm’s economic results over a
period” (Gibbons, 2015). The pretax operating income for the flower shop for 2017 is
$6,300.Pretax is determined by the following formula”
Gross Profit $14,000 -Operating Expenses $7,700= Pretax Operating Income $6,300
Profit before tax (PBT) is a profitability gauge that looks at a business’s profits before the
businessmust pay corporate income tax by deducting all expenses from revenue including
interest expenses and operating expenses except for income tax. The formula used to determine
this number is:
Pretax Operating Income $6,300-Interest Expense $500= Profit before tax (PBT) $5,800
Theincome taxes are typically filed on an annual basis. However, Roses, Roses, Roses Flower
Shop met with a tax accountant monthly to help estimate the income tax spent. This first year the
income tax expense was $ 500.
The net income is one of the most important numbers in the bottom line of any business. It tells
you how profitable the business is after every single one of its expenses have been accounted
INCOME STATEMENT SUMMARY
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for. If this number is a negative, it will show you how much money a business has lost in a
period. The flower shop’s net income was $4,300. This number was determined by the formula:
Profit before tax (PBT) $5,800- Income Tax Expenses $500=Net Income $4,300
Conclusion
The flower shop’s income statement is critical for identifying the overall wellbeing of the
business. It shows that for a first year the business has made a profit in a competitive business.
The income statement will also give us much needed data as to how to adjust expenses and
calculate interest expense to increase the profit in the year to come.
INCOME STATEMENT SUMMARY
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Roses, Roses, Roses Flower Shop
for the year ended December 31, 2017
Total Revenue
Cost of Goods Sold
$20,000
$ 6,000
$20,000
$ 6,000
Gross Profit
Operating Expenses
$14,000
$14,000
Salaries
Rent
Utilities
Depreciation
Amortization
$2,000
$4,000
$1,000
$ 500
$ 200
$7,700
Total Operating Expenses
Pre-Tax Operating Income
$6,300
Interest Expense
$ 500
Profits before Taxes
Income Tax Expenses
$5,800
$1,500
Net Income
$4,300
INCOME STATEMENT SUMMARY
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References
Leach, J. C., &Melicher, R. W. (2011). Entrepreneurial finance Boston, Massachusetts:
Cengage Learning.
Income Statement (2017) Retrieved fromhttp://www.investinganswers.com/dictionary/incomestatement
Gibbons, G., Hisrich, R.D., & DeSilva, C.M. (2015). Entrepreneurial Finance: A Global
Perspective (1st Ed). Thousand Oaks, CA: SAGE.
Gluskin, D. (2015). How to Write an Income Statement Retrieved from
https://www.careeraddict.com/write-an-income-statement
.

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